FTC Issues Final Order in AbbVie's $63 Billion Allergan Acquisition: Three Drugs to Be Divested

Compiled by | newborn

Following a public comment period, the U.S. Federal Trade Commission (FTC) recently approved a final order to resolve allegations that AbbVie’s $63 billion acquisition of Allergan would violate federal antitrust laws.

According to the charges first announced in May 2020, the proposed acquisition could harm competition in the current market for treating exocrine pancreatic insufficiency (EPI), as well as in the future market for IL-23 inhibitors, a class of drugs used to treat moderate-to-severe Crohn’s disease and moderate-to-severe ulcerative colitis.

The FTC is committed to promoting competition, protecting consumers, and educating them. In the case of AbbVie’s acquisition of Allergan, the Commission adopted the final order by a 3-1-1 vote, with Commissioner Rohit Chopra voting against it and Commissioner Rebecca Kelly Slaughter not participating.

The final divestiture order requires AbbVie and Allergan to divest Allergan’s two marketed pancreatic enzyme replacement therapy (PERT) drugs for exocrine pancreatic insufficiency (EPI), Zenpep and Viokase, to Nestlé, while also divesting Allergan’s rights and assets related to brazikumab to AstraZeneca. Brazikumab is an IL-23 inhibitor currently in clinical development for the treatment of moderate-to-severe Crohn’s disease and ulcerative colitis.

On June 25 last year, AbbVie and Allergan announced the signing of a definitive merger agreement, under which AbbVie would acquire Allergan in a cash-and-stock transaction. Based on the previous day’s closing share prices, the deal was valued at $63 billion.

In May this year, the two parties agreed to divest assets to address the FTC’s allegations that the proposed acquisition violated federal antitrust laws. Among these measures, AbbVie agreed to divest brazikumab to AstraZeneca and to divest Zenpep and Viokace to Nestlé.

According to the allegations at the time, only four companies in the United States marketed drug products for the treatment of exocrine pancreatic insufficiency (EPI). Among them, AbbVie and Allergan collectively controlled 95% of the market share for these drugs. After completing the review process of the proposed divestiture buyer, FTC staff concluded that Nestlé and its leadership possessed the expertise, U.S. sales infrastructure, and resources necessary such that divesting two EPI drugs to this company would effectively maintain competition, which would otherwise be lost due to the proposed acquisition.

Regarding IL-23 inhibitors, Stelara, marketed by Johnson & Johnson, is the only IL-23 inhibitor approved by the U.S. FDA for the treatment of both Crohn’s disease and ulcerative colitis. The IL-23 inhibitors from three other companies—AbbVie, Allergan, and Eli Lilly—are in late-stage clinical development. AstraZeneca was the original developer of brazikumab, and Allergan entered into a licensing agreement with it in 2016. FTC staff believed that the proposed acquisition would undermine competition in the IL-23 inhibitor market. In a consent order signed in May, AbbVie and Allergan agreed to terminate the brazikumab licensing agreement and return the rights to AstraZeneca to preserve competition in this class of drugs.

References:

1.FTC announces final order on AbbVie/Allergan merger with conditions

2.FTC Imposes Conditions on AbbVie Inc.’s Acquisition of Allergan plc

Original Title: Final Ruling Issued in AbbVie’s $63 Billion Acquisition Case: Divestiture of Three Drugs and Related Rights to AstraZeneca and Nestlé